S.Lanka's Dialog posts fifth straight loss

By Shihar Aneez and Ranga Sirilal COLOMBO, Nov 11 (Reuters) - Sri Lanka's largest mobile phone operator, Dialog Telekom, posted its fifth straight quarterly net loss for the third quarter, confounding analysts' expectations that it would break even. The company, a unit of Malaysia's Axiata, said on Monday it lost 438.9 million Sri Lankan rupees ($3.83 million) in the quarter ended Sept. 30, as profit remained elusive at its broadband and TV operations and margins were squeezed by fierce competition. This compared to a loss of 192.5 million rupees in the same period last year. "It is in the path of recovery, though we expected a breakeven this quarter," Danushka Samarasinghe, head of research at Asia Securities, told Reuters. "Dialog's TV and broadband business are still running at a loss without breaking even." January-September group net loss hit 9.97 billion rupees, compared to a 1.03 billion rupee net profit in the same period a year ago. Overall group turnover for the period edged down 4.7 percent to 26.2 billion rupees. Nine-monthly losses at Dialog's broadband and TV operations fell slightly to 513.5 million rupees from 571.5 million. The company's shares, which make up 5.86 percent or 55 billion rupees ($480.6 million) of the market capitalisation as of Wednesday, ended flat at 6.75 rupees, before the release. The company said its cost-cutting had helped it reduce operating costs by 1 percent compared to the previous quarter. But analysts said cost reduction alone would not help the telecoms firm to reverse its loss-making trend. "Sri Lanka's telecoms industry is faced with stiff competition with squeezed profit margin," said Channa Amaratunge, director at CT Capital. "The revenues are coming down due to high competition in mobile phone services." Five mobile phone service providers operate in Sri Lanka with a 20 million population and over 60 percent mobile penetration. Last month, Fitch Ratings in a statement said the entry of Emirates Telecommunications Corporation, which bought the Sri Lanka business of Millicom International Cellular SA , could further delay any prospects for recovery in Sri Lankan telecom operators' profitability. Shares in Dialog Telekom hit a life-time low of 4.50 rupees on March 5, on continuous losses since the third quarter of 2008. Last year, Dialog cut tariffs and introduced low-cost mobile phone packages to encourage customers to talk more amid high inflation and declining consumer spending power. With more than 6.3 million subscribers, Dialog still has the largest share of Sri Lanka's slowing mobile market. As well as Emirates, which is yet to start operations, rivals include Sri Lanka Telecom Ltd.'s Mobitel, Hutchison Telecommunications International Ltd. and Bharti Airtel. (Edited by Jon Loades-Carter) ($1=114.45 Sri Lankan rupees) (([e-mail]; [phone]; Reuters Messaging; [e-mail])) Keywords: DIALOG/ Keywords: DIALOG/ =2 (If you have a query or comment on this story, send an email to [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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